Betty Johnson Fraud Case

The reporting party (RP) stated there is a belief that the licensee and Maria Dickerson are committing fraud. According to the RP the licensee is never available. The RP stated Maria Dickerson lives in the licensed home with her son. The RP stated when they arrive to the facility Maria is the person providing care within 10-15 minutes the licensee would arrive at the home. There were a few occasions when the RP made visits she only communicated with the licensee over the telephone. The RP stated the licensee never answers the phone call made to (916) 806-8085 however, the licensee would return calls made to that phone number.

Phar-Mor, Inc was a thriving discount grocery store in the late 1980’s. Phar-Mor was moving product quickly but profit margins were not significant enough to pay the bills. By the early 1990’s, Phar-Mor declared bankruptcy due to fraudulent financial reporting and misappropriation of assets, making it one of the largest frauds in U.S. history. Below, we will use auditing standard AU 316.85 Appendix A in conjunction with the video “How to Steal $500 million” to analyze how incentives/pressures, opportunities, and attitudes/rationalizations allowed for fraud to start and continue at Phar-Mor.

1. The three aspects of fraud - Perceived pressure, Rationalization, and Opportunity were present in the CIT case as follows:

The Enron and WorldCom scandals were arguably the incidents that permanently changed the procedures for accounting controls. In response to these incidents, the Sarbanes-Oxley Act (SOX) of 2002 was passed. Once the knowledge of these scandals was made public, a number of subsequent accounting scandals were discovered in public companies such as Tyco International, HealthSouth, and American Insurance Group. In addition, a then-employee-owned company, Post, Buckley, Schuh & Jernigan, Inc. (dba PBS&J, now known as “Atkins North America, Inc.”), was also hit by a similar accounting scandal. Henceforth, a case study of PBS&J is presented where we will examine the fraudulent transactions that

Professional auditing standards discuss the three key “conditions” that are typically present when a financial fraud occurs and identify a lengthy list of “fraud risk factors.”

The company’s finance department had the chance to reduce the company’s weight in mortgage-backed securities. However, it chooses not to. The company’s financial adviser did not evaluate any risk that would emerge in the economic sector of the U.S during that year. Furthermore, the company had an opportunity to identify the consequence that would result due to the falling mortgages; somewhat the company neglected this risk and increased in value of portfolio.

Interestingly, this scenario is becoming more and more prevalent with the actions, and recent violent attacks are occurring worldwide. Further, acts of violence concerning shootings appear to be discussed more often in the media outlets and politics. While numbers and facts continue to be argued between both sides of gun control, the truth remains, the figures and facts can be woven and molded to back either side. Unfortunately, this is a terrible flaw with facts, graphs, patterns as people who understand how to manipulate the numbers are usually able to manipulate the story people hear. Betty Smith is in a difficult position where law and facts easily clash with emotions and belief regarding guns in the workplace.

In the Leslie Fay case, the fraud triangle was not critically evaluated prior to the issuance of unqualified audit opinions. Kenia had no incentive to commit fraud – he owned no company stock and did not receive a compensation based incentive. Pomerantz and Polishan had both of the aforementioned items included within their compensation package. Further, due to the lavish lifestyle and overbearing personalities of both Pomerantz’s and Polishan, they also clearly would have had rationalizations and justifications for the fraud. Additionally, given the “tight ship” Polishan ran in the Wilkes-Barre accounting office, Kenia would not have had opportunity – but Polishan would have, especially considering his close friendship with Pomerantz (Knapp, 2011).

There could be many reasons why the perpetrator had an opportunity to hide the fraud. It is clear that the internal control system is weak at Larson's Cement. In order for them to properly protect their assets it is important that the signing of checks and the management of bank accounts not be performed by the same individual. While Betty Landrone is the treasurer and the person keeping the checkbook, she shouldn’t supervise and handles the credit approvals, bill payments and collections. Having all these responsibilities assigned to Betty would give her an opportunity to create a dummy vendor. There is a conflict of responsibilities under this scenario and should be separated. Separating the duties among different people will minimize the

Some industry-specific factors, such as having valuable near-cash assets, can increase the organization's vulnerability. Also they will need to rationalize the actions as justifiable. The individuals committing the fraud must first convince themselves that their behavior is acceptable or will be temporary. For example, Barry Minkow’s believed that the lies and deceit are for the betterment of his company and that with time everything will eventually return to normal.

“The first leg of the fraud triangle represents pressure. This is what motivates the crime in the first place. The individual

Fraud is defined as a deliberate misrepresentation that causes a person or business to suffer damages, often in the form of monetary losses through deception or concealment. And Occupational Fraud as defined by the ACFE is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets. Traditional fraud triangle theory by Donald Cressey explains that propensity of fraud occurring in an organization lies on three critical elements which are Pressure, Opportunity, and Rationalization.

On February 27, 2014, the Department of Human Services, Office of Program Review, Monitoring and Investigation (OPRMI), Fraud Investigations Division received a 726 form alleging that John Jones (Jones) is receiving dual benefits in both DC and Maryland.

The perfect fraud storm occurred between the years 2000 and 2002 involving two of the largest energy and telecom corporations in the United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht & Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concealing the fraud until exposed and rectified.

This paper will discuss the corporation WorldCom, a telecommunications company that was based in Mississippi. In 2002 WorldCom was involved in one of the largest accounting scandals in the United States. WorldCom inflated its assets by nearly $11 billion dollars, which eventually lead to about 30,000 employees losing their jobs, as well as, 180-billion dollars in losses for its investors. The CEO at the time of this accounting fraud was Bernard Ebbers and led to him receiving a 25-year prison sentence. This paper will go into the details of how WorldCom was able to manipulate its accounting records to deceive its internal auditors, as well as, investors.